In recent years, the gap in rates between Westar North and Westar South has steadily closed, as nuclear plant debt was paid down and restructured and coal costs rose.
Today, Westar South customers pay slightly less per kilowatt-hour for electricity. Residential bills for north and south are within pennies of each other.
Westar says now is the time to equalize the rates, before they diverge again.
But the Wichita school district has intervened in the case and argues that rate parity now would be unfair to Westar South customers.
"South rate area customers are just beginning to realize the benefits of paying for one half of the investment costs in Wolf Creek," said an analysis by James Daniel of GDS Associates, who testified for USD 259. "The north rate area customers would begin to receive the Wolf Creek low fuel cost benefits, yet they have not paid one dollar towards the high investment costs."
Westar and the commission staff argue that they have worked hard to reduce southern bills over the years and that Westar is one company operationally.
"They are dispatched as one system of generators, decisions about transmission treat the two areas as one system, and capacity expansion planning treats both service areas as one service area," said Robert Glass, chief of economic policy and planning for the commission. "This has been true since the merger of KPL and KG&E became effective."
Costs shifting north>
As the commission considers whether to combine the rates for the two systems, about the only certainty is that cap-and-trade costs would fall harder on Westar North than Westar South if the rates remain separate.
The main reason is that the Jeffrey power plant emits about 16 million tons of carbon dioxide a year, while Wolf Creek emits none.
Analysts for the Citizens' Utility Ratepayer Board and Kansas Industrial Consumers both estimated that about two-thirds of the cost of cap-and-trade would fall on Westar North.
The two consumer groups are usually allies, but in this case, CURB favors rate consolidation and the industrial group opposes it.
If the cost of CO2 emissions after cap-and-trade is $10 a ton, it would work out to about $181 million a year for Westar North and $90 million a year for Westar South, according to estimates by Donald Gruenemeyer, president of Sawvel and Associates.
At $25 a ton, the cost would be $451 million annually for Westar North and $226 million for Westar South.
Gruenemeyer is working as a consultant to the industrial group, which includes major Wichita manufacturers such as Spirit AeroSystems, Cessna Aircraft and Hawker Beechcraft.
If rates remain separate, Gruenemeyer estimates that southern Kansas would pay lower bills than the north for the next 10 years and that cap-and-trade would only widen the gap.
Westar has yet to file detailed public testimony on the potential impact of cap-and-trade on system rates.
"I wish I knew," said Dick Rohlfs, Westar's director of retail rates.
